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10 Reasons Why Employee Engagement Is Important

Employee engagement, more than a hot topic in the consultant set, is a phenomenon that results from a variety of types of organizational support of its employees. But more importantly it's an employee characteristic that reaps big rewards for employers. Here are 10 reasons to get on the employee engagement bandwagon.

1. More productive employees.

A business with highly engaged employees will achieve a productivity level, a measure of efficiency, that is 51 percent higher than if employees are not engaged, writes J. K. Harter, F. L. Schmidt, and T. L. Hayes in the Journal of Applied Psychology. Higher productivity can lead to lower prices that can result in:

• Increased profit

• Greater customer satisfaction

• Increased sales

• Improved competitiveness

2. Greater shareholder returns.

A business with engaged employees might have shareholder returns that are 9 percent greater than other businesses, according to the 2010 Towers Watson "The Health and Productivity Advantage" report.

3. Employee performance.

Engaged employees perform 20 to 28 percent better than do disengaged employees according to the 2006 publication "Employee Engagement, a Review of Current Research and Its Implications" issued by the United States Conference Board. Employee performance refers to the way a person accomplishes a task. Consequently, an engaged employee who feels a heightened emotional connection for his company will exert greater discretionary effort to his work.

4. Happier customers and clients.

There are many reasons customers are happier when company representatives represent their company well. For instance, Surveymonkey, a maker of a platform used by other companies to conduct surveys, says disengaged employees fail to pass critical information from the customer to the appropriate person. Also, the quality of the service provided by disengaged representatives is less than that of engaged representatives. Consequently, disengaged employees can have a negative effect on sales.

5. Lower absenteeism and employee turnover.

Higher levels of employee engagement result in as much as 65 percent lower turnover, writes John Baldoni in the Harvard Business Review article "Employee Engagement Does More Than Boost Productivity." In addition to greater retention, Baldoni says, employee engagement also has a positive effect on absenteeism.

6. Improved quality of work and health.

Baldoni also credits employee engagement for improvements in quality of work and health. For instance, Baldoni says companies that score higher in employee engagement report "48% fewer safety incidents; 41% fewer patient safety incidents; and 41% fewer quality incidents (defects)."

7. Higher job satisfaction.

The Society of Human Resources 2014 report "Employee Job Satisfaction and Engagement" states that employee engagement contributes to higher job satisfaction. Job satisfaction is a description of employee feelings. It is employee happiness due to his job and related conditions, such as benefits, compensation, work environment and career development.

8. Highly motivated employees.

A motivated employee anticipates a return for his daily efforts. For instance, he might do great work to receive a bonus, a perk or recognition. He might also be motivated to assume greater responsibility or receive a promotion. An engaged employee is willing to exert the effort need to achieve any or all of those goals.

9. Higher levels of employee loyalty.

Loyalty has a positive effect on employee productivity and retention. Whereas, employee engagement is a key determinant of worker loyalty, loyalty is linked to four company performance drivers: productivity, employee stability, revenue and customer loyalty says Timothy Keningham and Lerzan Aksoy in the Monster article "Why Employers Should Care About Employee Loyalty."

10. Higher company profits.

Talent Culture, a human resources blog, says a 10 percent increase in employee engagement initiatives can lead to an increase in per employee profits of $2,400 per year. The origin of the increase is, in part, due to the above-average productivity achieved by highly engaged employees.

A company can engender employee engagement using different types of organizational benefits, such as benefits, working conditions, leadership and salary. More importantly, employee engagement is an employee characteristic that reaps big rewards for employers as these 10 benefits suggest.